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SUSAN MILLER, TASSOS NASSOS individually and as Trustee of the living trust of Tassos NASSOS and the irrevocable trust of JAMES MILLER. ROYAL MACCABEES LIFE INSURANCE COMPANY One of its Attorneys. Defendant's Section 2-619(a)(9) Motion to Dismiss Plaintiffs' Fifth Amended Complaint, a copy of which is attached hereto
SUSAN MILLER, TASSOS NASSOS individually and as Trustee of the living trust of Tassos NASSOS and the irrevocable trust of JAMES MILLER. ROYAL MACCABEES LIFE INSURANCE COMPANY One of its Attorneys. Defendant's Section 2-619(a)(9) Motion to Dismiss Plaintiffs' Fifth Amended Complaint, a copy of which is attached hereto
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SUSAN MILLER, TASSOS NASSOS individually and as Trustee of the living trust of Tassos NASSOS and the irrevocable trust of JAMES MILLER. ROYAL MACCABEES LIFE INSURANCE COMPANY One of its Attorneys. Defendant's Section 2-619(a)(9) Motion to Dismiss Plaintiffs' Fifth Amended Complaint, a copy of which is attached hereto
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Attribution Non-Commercial (BY-NC)
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IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS
COUNTY DEPARTMENT, CHANCERY DIVISION
SUSAN MILLER, Dr. TASSOS P.
‘NASSOS individually and as Trustee
of the living trust of Tassos Nassos and the
irrevocable trust of Mary Nassos,
MARY NASSOS as Trustee for the
irrevocable trust of Tassos Nassos and
JAMES MILLER, as Trustee
for the irrevocable trust of
Dr. Michael Marchi,
and all others similarly situated,
Plaintifis,
v.
ROYAL MACCABEES LIFE
INSURANCE COMPANY,
Defendant.
No. 97 CH 04324
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) The Honorable Julia Nowicki
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NOTICE OF FILING
TO: See Attached Service List
PLEASE TAKE NOTICE that on the 3rd day of March, 2000, there was filed with the
Clerk of the Circuit Court of Cook County, Defendant's Section 2-619(a)(9) Motion to Dismiss
Plaintiffs? Fifth Amended Complaint, a copy of which is attached hereto.
Mark K. Schoenfield
Daniel E. Beederman_
Henry A. Hauser
Schoenberg, Fisher, Newman & Rosenberg, Ltd,
Suite 2100
222 S. Riverside Plaza
Chicago, Illinois 60606
B12) 648-2300
Atty. No, 90659
REASSURANCE AMERICA — LIFE
INSURANCE COMPANY f/k/a ROYAL
MACCABEES LIFE INSURANCE
COMPANY
By:
One of it8’AttorneysICA’ EI
Under penalties as provided by law purstiant to Section 1-109 of the Code of Civil Procedure,
the undersigned hereby certifies that she served a true and correct copy of Defendant's Section 2-
619(a) (9) Motion to Dismiss Plaintiffs’ Fifth Amended Complaint upon
Lawrence Schad
David Phillips
Beeler, Schad & Diamond
332 South Michigan Avenue
Suite 1000
Chicago, Illinois 60604-4398
Facsimile: (312) 939-4661
by delivering a copy of same by messenger on March 3, 2000; and upon
Christopher V. Langone
25 East Washington, Suite 1805
Chicago, Mlinois 60602
Facsimile: 312- 782-2022
‘Anthony J, Madonia
‘Anthony J. Madonia & Associates
150 North Wacker Drive
Suite 900
Chicago, Mlinois 60606-1605
Facsimile: (312) 578-9303
Michael Childress
Childress & Zdeb, Ltd.
6 West Hubbard Street
Fifth Floor
Chicago, Illinois 60610
Facsimile: (312) 494-0202
via United States Postal Service, by depositing same in a properly addressed envelope with postage
fully prepaid, and depositing same in the U.S. Mail located at 222 South Riverside Plaza, Chicago,
Illinois before the hour of 5:00 p.m. on March 3, 2000.
Heat MihefIN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS
COUNTY DEPARTMENT, CHANCERY DIVISION
SUSAN MILLER, Dr. TASSOS P. NASSOS
individually and as Trustee of the living trust,
of Tassos Nassos and the irrevocable trust of
Mary Nassos, MARY NASSOS as Trustee
for the irrevocable trust of Tassos Nassos and
JAMES MILLER, as Trustee of the irrevocable
trust of Dr. Michael Marchi, and all others
similarly situated,
Plaintifis,
No. 97 CH 04324
vy.
ROYAL MACCABEES LIFE INSURANCE
COMPANY,
‘The Honorable Julia Nowicki,
Judge Presiding.
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Defendant. )
DEEENDANT’S_ SECTION 2-619(a)(9) MOTION TO DISMISS_
‘PLAINTIFES FIFTH AMENDED COMPLAINT BASED ON
‘THE VOLUNTARY PAYMENT DOCTRINE
Defendant, REASSURANCE AMERICA LIFE INSURANCE COMPANY f/k/a ROYAL
MACCABEES LIFE INSURANCE COMPANY (“Maccabees”), by its attomeys, Schoenberg,
Fisher, Newman & Rosenberg, Ltd., pursuant to Section 2-619(a)(9) of the Illinois Code of Civil
Procedure, hereby moves for dismissal of the named plaintiffs’ Fiflh Amended Complaint based on
the voluntary payment doctrine on the following grounds.
1. Plaintiffs’ six count Fifth Amended Complaint, filed on February 4, 2000 pursuant
to the court’s order of January 7, 2000, seek damages and equitable relief claiming that Maccabees
deducted excessive Cost of Insurance "COI" amounts from their insurance policies since 1991
2. On June 3, 1999, Judge Getty granted Maccabees’ 2-619(a)(9) Motion to Dismiss
plaintiffs” Third Amended Complaint, asserting similar complaints about the 1991 COT increase,
based on the voluntarily payment doctrine. A copy of Judge Getty’s Memorandum of Opinion of
June 3, 1999 is attached hereto as Exhibit A.3. Judge Getty denied plaintiffs’ Motion to Reconsider on September 14, 1999, on the
basis that his original ruling on the voluntarily payment issue was correct. A copy of Judge Getty’s
Memorandum of Opinion of September 14, 1999 is attached hereto as Exhibit B. However, he
granted the plaintiffs leave to file a Fourth Amended Complaint.
4, Plaintiffs filed 2 motion to reconsider Judge Getty’s ruling of September 14, 1999,
which this Court granted on January 7, 2000. A copy of this Court's Memorandum of Opinion of
January 7, 2000 is attached hereto as Exhibit C. In its opinion, this Court stated that: "This Court’s
review of the history of the case indicates that the defendant relied on the pleadings (or the absence
thereof), rather than any factual bases supporting its arguments concerning the disputed factual
issues." The Court then determined that it should permit the filing of an amended pleading to allow
plaintiffs to attempt to cure the defects shown by Maccabees’ 2-619 motion. See Memorandum of
Opinion of January 7, 2000 at 6.
5, This Court’s order permitted the plaintiffs to file their Fifth Amended Complaint, but
expressly declined to rule on the sufficiency of the Fourth Amended Complaint because the Court
presumed that the plaintiffs would reallege the facts relied on by the Court in deciding the motion,
to reconsider in the Fifth Amended Complaint which "...the defendant can attack in a timely
manner." Opinion of January 7, 2000 at 7.
6. Maccabees moves to dismiss plaintiffs’ Fifth Amended Class Action Complaint based
on the voluntary payment doctrine based on the facts set ont below as supported by the affidavits of
‘Thomas Marr, Stephan Kellar and Michael McGrath, attached hereto as Exhibits D, E and F
respectively.
7. In 1991 and 1992, Maccabees mailed a notice of a change in the COI rates to
policyholders, including the plaintiffs, on the anniversary date of cach policy. See Marr Affidavit
(Ex. D), at par3. A copy of this notice is attached (o the Marr Affidavit (Ex. D) as Exhibit A. Judge
2Getty found that all plaintiffs were sent such notice. See Exhibit A, Memorandum of Opinion of
June 3, 1999 at 9.
8. In 1991, Maccabees sent three mailings to each of the independent brokers who had
contracted with it regarding the sale and servicing ofits life insurance policies. Those three mailings
are attached to the Marr Affidavit (Ex. D) as Exhibit B [Maccabees newsletter regarding the COL
increase including the DAC tax aspect, transmitted July, 1991], Exhibit C [Maccabees newsletter
regarding the impact of AIDs related deaths on the COI, transmitted July, 1991], and Exhibit D
[information regarding the COI change for policy illustrations}. The brokers at the time of those
mailings included plaintiff James Miller. See Marr Affidavit (Ex. D) , at par. 4.
9. From 1991 to the present, Maccabees had a customer service department which had
procedures for handling both policyholder and broker inquiries or complaints about the COL
increase. These procedures included referring each call about the COL increase to a supervisor who
had further information about the increase, including all of the information contained in Exhibits B
and C of the Mant Affidavit (Ex. D) which the supervisors were to disclose and discuss as needed,
form letters which could be used to provide information {sce Marr Affidavit, Exhibit D], and the
ability also to have copies of the Maccabees’ newsletters (Exhibits B and C] sent as needed. Some
customers called in and were given further information about the COI increase. See Marr Affidavit
(Ex. D), at par. 5.
10. Inaddition, there were numerous newspaper articles concerning the passage of the
DAC tax by the United States Congress. See Marr Affidavit (Bx. D), at par. 6. A copy of the new
tax law is attached to this motion as Exhibit G.
11. With regard to the life insurance policies referred to in the plaintiffs’ complaint, the
policies are flexible premium policies, and are not single premium policies. With flexible premium
policies, the Cost of Insurance charges and other policies costs are not paid once out of any one
3premium deposit, unlike fully paid-up single premium policies. Instead, the policyholder makes a
payment or deposit which is credited to the accumulation value. Each month, the Cost of Insurance
charges and other policies costs are paid by being deducted from the accumulation value, assuming
sufficient funds remain to do so, The policies are called “Flexible Premium Adjustable Life”
policies, and explain the “Adjustable Benefit Amount...Flexible Premium payments,” as well as that
there is an initial premium and monthly payment of policy expense charges, including COI, through
deductions from the accumulation value. The notice of the COI increase at issue was part of an
annual statement, which also showed that the COI and other expense charges are monthly charges.
‘The COI charges were being paid on a monthly basis before and after the COI rate increase which
is referred to in this case. Furthermore, policyholders can pay funds to the company on a flexible
basis, See Kellar Affidavit (Ex. B) , at par. 2.
12. Moreover, every policy referred to in the plaintiffs” complaint had a grace period
which is a non-forfeiture provision [for example, sec the plaintiffs’ pending complaint at its Exhibit
A}, which provides a 61 day period at the end of which a policyholder can make a late payment of
premium and have the policy be in force without any loss of coverage or other rights under the
policy, and no surrender charge. See Kellar Affidavit (Ex. B) , at par. 3.
13, Maccabees had the power to waive surrender charges in its life insurance policies.
Furthermore, as part of its business and legal practices during 1991-June 1999, Maccabees would
have considered doing so in order to avoid possible litigation had the named plaintiffs protested the
COI increase to the company or requested waiver of the surrender charges, just as Maccabees
resolved other individual policyholder complaints from time to time in order to avoid litigation. See
McGrath Affidavit (Ex. F), at par, 2.
14, Earlier in this litigation, Judge Getty rejected a proposed settlement of certain of the
named plaintiffs’ olaims agreed to by the parties. If plaintiffs had not filed suit in this case and
4instead properly protested to the company, the parties could have settled their claims as they wished
without the necessity of court approval. See McGrath Affidavit (Ex. F),, at par. 3.
15. Under the voluntary payment doctrine, plaintifis’ claims are barred because plaintiffs
had sufficient notice of the CO1 increase and then voluntarily paid it prior to filing this case. In
addition, plaintiffs” payments were not made under protest. Sec current Complaint and prior rulings
of June 3 and September 14, 1999.
WHEREFORE, the defendant respectfully requests that this Court dismiss the named
plaintiffs’ Fifth Amended Complaint based on the voluntary payment doctrine because: (1) plaintifis
"were fully informed of the facts upon which they could have protested payment of the COT increases
at the time they made such payments, but failed to do so, and (2) plaintiffs paid the COM increases
voluntarily and not under duress.
Respectfully submitted,
REASSURANCE AMERICA LIFE
INSURANCE COMPANY f/k/a ROYAL,
MACCABEES LIFE INSURANCE
COMPANY
7 Moth hebhall i
One of the Defendant’s Attorneys
Mark K. Schoenfield
Daniel E. Beederman:
Henry A. Hauser
Schoenberg, Fisher, Newman & Rosenberg, Ltd.
222 South Riverside Plaza, Suite 2100
Chicago, Illinois 60606-6101
Phone: (312) 648-2300
Firm No. 90659
FAISERSIDXADAAIROVALSISDISL STHIN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS
‘COUNTY DEPARTMENT, CHANCERY DIVISION
SUSAN MILLER, DR. TASSOS P.NASSOS =)
individually aud as Trustee of the living trust)
of Tassos Nassos and the irrevocable trustof =)
MARY NASSOS as Trustee for the irrevocable)
trust of Tassos Nassos and JAMES MILLER, )
‘as Trustee of the irrevocable trust of )
Dr. Michael Marcht, and all others similarly =)
situated. )
Plaintiffs, )
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d
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d
ve No. 97 CH 04324
ROYAL MACCEBEES LIFE INSURANCE
COMPANY,
baat Defendants.
MEMORANDUM OF OPINION
‘This matter comes before the Coutt on the mation of the defendant, Royal Macoaboes Life
Insurance Company (‘Royal Maccabees”), to dismiss the named plaintiffs, based on the voluntary
payment doctine, pursuant to Section 2-619(0)(9) ofthe Ilinais Code of Civil Procedure,
_ Thechain
Yn their Third Amended Complaint, the plaintifis es a class allege that Royal Maccabees
Improperty increased the cost of insurance (‘COT rato charges on Royal Maccabees life
insurance policies in 1991." ‘The plaintiff's essentially complain that Royel Maccabees illegally
noreased the cost of insurance rates for reasons othe that those ellowed under its contracts and
thereby breached its contracts with the plaitifi Plsintifis claim that the defendant made these, sta
‘Specially, de plains point to page L-S FPAL-6) “Cot of insurance Beas” which ates at
engonthy Cectof incense Rates willbe determined by the Company fom time to time based on fs expetations
as to future mortality experience."
1increases without giving proper notice. The COI increase at issue in this case was noticed by the
following language inthe 1991-1992. Annual Statements for cach of the affected policyholders:
POLICY NOTES a
STARTING SEP 15, 1991, CURRENT MONTHLY INSURANCE CHARGES
ON THIS POLICY WILL BE ADJUSTED. ‘THE POLICY PERSISTENCY
‘ADJUSTMENTS MAY ALSO; SUPPORT INCREASED INTEREST CREDITS
‘ON SOME POLICIES. Plaintiffs* Response, Exhibit 2.
tsint claim thatthe defendant illegally inoreard the COL rats beesuse the ais were
increased for rasons other than verso epovations (9 future mortality experience, namely
te deteadant llegely increased the COL ates based on now federal corporte axcs and
increase in AIDS related deaths. “Acorting to Royal Maccabees, the plait recived ntie of
theinoresse, vitinanertanoutpacas wets some
didnot subsequently protest he payments “Therefore, Royal Mavcdhoes concludes, the plaints"
slaims ero bared einoe thy lave voluntarily made payments ofthe higher COT changes afer
having been given notice.
‘The2619 Motion